Fillable Form 6781 - Gains And Losses From Section 1256 Contracts And Straddles

Form 6781 (2011)

Page

General Instructions

Special rules apply to certain foreign

forming part of the straddle must be

currency contracts. See section 988 and

clearly identified as being part of such

Section references are to the Internal

Regulations sections 1.988-1(a)(7) and

straddle. If you make this election, it will

Revenue Code unless otherwise noted.

1.988-3. If an election is made under

apply for all later years and cannot be

section 988(a)(1)(B) or 988(c)(1)(D), attach

revoked without IRS consent. If you are

What's New

to your return a list of the contracts

making or have previously made this

covered by the election(s). On the

election, check box A and report the

Future developments. The IRS has

attachment, show the net gain or loss

section 1256 component in Part II

created a page on IRS.gov for

reported from those contracts and

instead of Part I.

information about Form 6781 and its

identify where the gain or loss is

instructions at

Box B. Straddle-By-Straddle

reported on the return. If an election is

Information about any future

made under section 988(a)(1)(B), report

Identification Election

developments affecting Form 6781 (such

on Form 6781 the gains and losses from

as legislation enacted after we released

section 1256 contracts that are also

Make this election for mixed straddles

it) will be posted on that page.

section 988 transactions.

according to Temporary Regulations

Form 8949. Form 8949 is new. Many

section 1.1092(b)-3T(d) by clearly

Options and commodities dealers

transactions that, in previous years,

identifying each position by the earlier of

must take any gain or loss from the

would have been reported on Schedule

(a) the close of the day the identified

trading of section 1256 contracts into

D (Form 1040) must be reported on Form

mixed straddle is established or (b) the

account in figuring net earnings subject

8949 if they occur in 2011. See the

time the position is disposed of. No

to self-employment tax. See section

Instructions for Schedule D (Form 1040)

straddle-by-straddle identification

1402(i).

for instructions on how to complete

election may be made for any straddle

Form 8949.

Mark-to-Market Rules

for which a mixed straddle election was

made or if one or more positions are

Straddle-by-straddle identification

Under these rules, each section 1256

includible in a mixed straddle account. If

election. For 2011, individuals have

contract held at year end is treated as if

you are making or have previously made

special rules for reporting a net gain or

it were sold at fair market value (FMV)

this election, check box B.

loss attributable to a net non-section

on the last business day of the tax year.

1256 position. See Box B. Straddle-By-

If the net gain or loss is attributable to

The wash sale rules do not apply.

Straddle Identification Election in the

a net non-section 1256 position, then

General Instructions.

Gains or losses on section 1256

the net gain or loss is treated as a

contracts open at the end of the year, or

short-term capital gain or loss. For 2011,

Form 1099-B. Form 1099-B has been

terminated during the year, are treated

enter it directly on Form 8949 or the

revised. Include on line 1 the amount

as 60% long term and 40% short term,

Schedule D for your return and identify

from box 13, not box 11, of each Form

regardless of how long the contracts

the election. Individuals, enter a net gain

1099-B. See the Specific Instructions,

were held.

in column (e) of Form 8949 or enter a net

Part I, Line 1.

loss in column (f) of Form 8949. If the net

Straddle

Purpose of Form

gain or loss is attributable to a section

1256 position, enter the gain or loss in

A straddle means offsetting positions

Use Form 6781 to report:

Part I of Form 6781 and identify the

with respect to personal property of a

• Any gain or loss on section 1256

election.

type that is actively traded.

contracts under the mark-to-market

Box C. Mixed Straddle

Offsetting Positions

rules, and

Account Election

• Gains and losses under section 1092

If there is a substantial decrease in risk

from straddle positions.

of loss to a taxpayer holding a position

Make this election according to

because that taxpayer or a related party

For details on section 1256 contracts

Temporary Regulations section

also holds one or more other positions,

and straddles, see Pub. 550, Investment

1.1092(b)-4T(f) to establish one or more

then those positions are offsetting and

Income and Expenses.

mixed straddle accounts for 2012 by the

may be part of a straddle. However, if an

due date (without extensions) of your

Section 1256 Contract

identified straddle is properly

2011 tax return. To make this election,

established, other positions held by the

check box C and attach to your return

A section 1256 contract is any:

taxpayer will not be treated as offsetting

(or your request for an extension of time

• Regulated futures contract,

with respect to any position which is

to file) the statement required by the

part of the identified straddle.

regulations. Report the annual account

• Foreign currency contract,

net gain or loss from a mixed straddle

Box A. Mixed Straddle

• Nonequity option,

account in Part II and identify the

Election

• Dealer equity option, or

election. See Temporary Regulations

section 1.1092(b)-4T(c)(4) for limits on

• Dealer securities futures contract.

Under section 1256(d), you can elect to

the total annual account net gain or loss.

have the mark-to-market rules not apply

For definitions of these terms and

Note. If you did not make any of the

to section 1256 contracts that are part

more details, see section 1256(g) and

above elections and you have a loss on

of a mixed straddle. A mixed straddle is

Pub. 550.

the section 1256 component, use Part II

any straddle in which at least one but

Note. A section 1256 contract does not

to reduce the loss by any unrecognized

not all of the positions is a section 1256

include any interest rate swap, currency

gain on the non-section 1256

contract. On the day the first section

swap, basis swap, commodity swap,

component before making an entry in

1256 contract forming part of the

equity swap, equity index swap, credit

Part I. You also must reduce the loss

straddle is acquired, each position

default swap, interest rate cap, interest

from any section 1256 component of a

rate floor, or similar agreement.

straddle that would be a mixed straddle

if the positions had been properly

identified as such.

Form 6781 - Gains And Losses From Section 1256 Contracts And Straddles - 2011 Page 2

Related Articles

Related forms

Related Categories